Stocks in the defense sector are moving well this morning. One of the best performers is Northrop Grumman (NOC) - Get Report , with a 2.5% gain. This powerful surge has driven shares to new all-time highs as it extends the rebound off last week's spike low to 6.75%.
With a solid support zone now in place, Northrop Grumman is set up well for more upside.
In early May, North began a long-overdue consolidation. Over the previous three and half months, the stock had rallied over 25% and was entering overbought territory. This healthy sideways action remained in a very narrow range while the April high offered solid support.
On the upside, the initial May peak marked the upper band of the consolidation. The consolidation was solid enough to contain the huge selling wave that hit the stock during Friday's Brexit flush. Since that low, Northrop Grumman has steadily improved as bullish interest has perked up nicely.
With Northrop Grumman now well below its early May overbought moving average convergence/divergence reading, today's breakout move has room to run. Investors should consider shares a buy on weakness as a fresh rally leg develops. Northrop Grumman now has a very solid support zone in place between $219 and $215. A fade back down to this area will produce a very low-risk entry opportunity for patient bulls.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.